The IPO is being marketed to institutional investors as a “solid company” with a good dividend, which is expected to pay a 5pc to 6pc yield, with a dividend of 8.3p to 8.6p a share.

Bain Capital, Advent and Blackstone have been working in a consortium on a potential bid but so far have been unable to persuade RBS to open Direct Line’s books.

In an IPO, it is unusual not to have a sales process running alongside flotation plans - in many cases to help create a floor on the price that shareholders have to pay. However, institutional fund managers have pushed back against the “dual structure” because they claim it wastes their time when a private equity bidder snaps up the company, as was the case with Pets at Home.

“There is no engagement, which is very difficult,” said a source.

Three years ago, another consortium of buy-out firms tried to buy Direct Line for more than £5bn, although those in the RBS camp dispute the bid was concrete. Since then, the insurance market has fallen dramatically. Direct Line’s tangible book value is about £2.3bn, and any sales process will not deliver much higher than “book” due to its limited growth prospects.